Third quarter revenues at Clarient increased 59% to $19.0 million from the $11.9 million reported in Q3 2007. This marks the company’s 17th consecutive quarter of sequential revenue growth. Higher testing volume, a favorable service mix and higher Medicare reimbursement rates drove revenues.
Testing volume for the third quarter of 2008 increased 53% year-over-year. The company will add several new growth drivers in coming months. These include the launch of the long awaited Insight Dx Breast Cancer Profile, and the introduction of the Insight Dx Prostate Profile, licensed from Health Discovery Corporation. In September, Clarient announced that, with Definiens, it will develop and commercialize tools to help evaluate quantitative biomarkers that predict cancer treatment response.
Clarient has also announced its intention to expand its sales and marketing infrastructure. The company will hire additional sales reps to cover previously underserved territories. Confident in its ability to execute, Clarient is again raising guidance of full year 2008 revenue growth from a range of 45% to 55% to a range of 55% to 60% over 2007 levels.
Ron Andrews, CEO, said, “We have reached a milestone in our operating model where 2009 revenue growth is expected to increase operating profit and cash flow.” Gross profit for the third quarter of 2008 was $11.8 million, an increase of 91% compared with $6.2 million in Q3 2007. Gross margin for the third quarter of 2008 was 62% compared with 52% in the prior year period. Gross margin improved primarily as a result of volume growth, especially in higher margin tests.
The company managed an operating profit (of $0.2 million) for the first time. In Q3 last year, the company had an operating loss of $2.5 million. Net loss for the third quarter of 2008 was $2.2 million.
Investors continue to feel the pangs of the company’s debt obligations – the only thing, in my opinion, keep this stock at such low levels. As of September 30th, Clarient had cash and cash equivalents of $1.9 million. The company has access to $10.6 million under existing lines of credit.